Prime Minister Tony Abbott has dismissed an online backlash against his decision to make Prince Philip a Knight of the Order of Australia. Photo: Supplied

"I'll leave social media to its own devices. Social media is kind of like electronic graffiti and I think that in the media, you make a big mistake to pay too much attention to social media," Mr Abbott said.

"You wouldn't report what's sprayed up on the walls of buildings."

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The Prime Minister said Prince Philip and the other new knight, Air Chief Marshal (retired) Angus Houston, were "eminently suitable recipients" of the award.

He said Prince Philip was being acknowledged for a long life of duty and service and as a "great servant" of Australia.

"It's outside the mainstream, I think, of Australian thinking to have done this": Labor leader Bill Shorten on the PM's Prince Philip decision. Photo: Simon O'Dwyer

"He's the patron of hundreds of organisations. He's the inspiration and wellspring of the Duke of Edinburgh's Awards, which have provided leadership training for tens if not hundreds of thousands of Australians over the years," Mr Abbott said.

"I'm just really pleased that in his 90s, towards the end of a life of service and duty, we in this country are able to properly acknowledge what he's done for us."

Prince Philip joins his son, Prince Charles, who was made a Knight of the Order of Australia in 1981.

Opposition Leader Bill Shorten said Mr Houston was an "outstanding" person to receive high Australian honours.

But the Prime Minister was in a time warp awarding a knighthood to Prince Philip on a day Australians were talking about their national identity, he said.

"I just think people think it's an unusual priority," he told Fairfax Media radio station 3AW.

"It's outside the mainstream, I think, of Australian thinking to have done this."

Speaking later at a citizenship ceremony in Melbourne, Mr Shorten said that, if Australia was going to have knights and dames, "let's give it to Australians".

"My beef is not with Prince Philip. He is a distinguished member of the British royal family who has been contributing for many decades. My concern is that the Australian government, the Abbott government, could not find an Australian to give one of these awards to."

When he announced the return of knights and dames as Australia's top honours last March, Mr Abbott said the honour would be reserved for Australians whose contributions to national life were thrust upon them rather than sought.

Up to four knights or dames will be appointed in any year.

Labor MPs questioned whether the move to give Prince Philip the title was a "hoax", while Greens Leader Christine Milne described the decision as a "joke within a joke".

Mr Abbott has faced a difficult start to 2015 amid rising anger among colleagues about his handling of key policies.

The Prime Minister has been quietly ringing backbenchers during January in an effort to address anxiety over the government's performance.

Mr Abbott said on Monday: "It's important that the government learn the lessons of 2014, and that's what I've been talking to my colleagues about."

He said there had been "pretty candid conversations about all sorts of subjects".

"Many of them have raised electoral issues," Mr Abbott said.

"Many of them have been very satisfied with the work we did as a government in 2014, the boats have stopped, the carbon tax has gone, the mining tax has gone, three free-trade agreements have been signed, a lot of red tape has been cut for small business.

"So a lot of good has been done, but obviously there's unfinished business."

Senator Milne said Mr Abbott's decision to award a knighthood to Prince Philip was "a joke within a joke".

"As we saw with all nominees for Australian of the Year, there are plenty of wonderful people right here who are worthy of recognition, but this is Tony Abbott - stuck on what Australia was and failing to notice all that we are, or have any vision or pathway towards all that we can be," she said.